Expansion into the national market

In this excerpt, Gruber explains how and why he expanded Spring City Mills into the West Coast market during the early 1950s. After conducting market research and identifying a unique opportunity to guarantee control over his partnerships with JCPenny's and Sears in the West Coast, Gruber describes his decision to buy land and build a plant in Arizona. Gruber's father, who still maintained control of most of Spring City Mills' stock refused to agree to this expansion and Gruber made the decision to buy out his father's holdings in the business. With the help of Everett Jordan, Gruber assumed primary control over Spring City Mills in the early 1950s as a result and proceeded to expand the companies power nationally. His comments here are demonstrative of generational transition and the evolution of business strategy during the mid-twentieth century.

Citing this Excerpt

Oral History Interview with Edward L. Gruber, November 11, 1985. Interview C-0136. Southern Oral History Program Collection (#4007) in the Southern Oral History Program Collection, Southern Historical Collection, Wilson Library, University of North Carolina at Chapel Hill.

Full Text of the Excerpt

My father, he had a stroke about 1950 and all of sudden he became
interested in the underwear business. We used to have a board of
directors meeting - the board of directors was my
father, our attorney, myself and our accountant. I decided I was going
to build a plant in Arizona - I had been helping
out in the shipping room when they got behind and I would see all these
big orders going to California. So one morning it just occurred to me
that there wasn't any boy's or men's underwear made west of the
Mississippi river. So what happens to Spring City if somebody builds an
underwear plant out west - we'd lose all that west
coast business. So I got Ben Kohler, our controller over at Spring
City - we found out that we were shipping about
half of everything we shipped out to the west coast. After WWII all of
Penny's big expansion was out on the west coast. They had 36 stores
in L. A. and they were all big ones. I talked to
my dad and we had a board of directors meeting that we ought to build a
plant in Arizona. Well we agreed that I should go out and take a look
anyhow. Well I sent George Dyer, our manager in our New York office. He
and a Sears Roebuck land management - or the people
that found the locations to build new stores. They went out and they
started at El Paso, Texas and they went all the way up the west coast to
Seattle, then they back tracked down and they called me from Phoenix,
and they said the place to build was Phoenix, Arizona, because it's
overnight to L. A., and you can ship east as well as you can west, and
the transportation is good. California was highly unionized and they had
an inventory tax - a floor tax. Arizona had a very
low tax rate plus they had a Right-to-Work law and practically no unions
in Arizona. We had never had a union any more than you people did. I
think I ought to interject here that Everett contributed as much as I
did to our not having a union. He used to say, "As long as you
can keep them talking without fighting - "
no, it was "As long as you're talking you won't be
fighting." He made that statement onetime on the Senate floor.
It was something about shipping - he was on the
Agricultural Committee and he went up to Canada. At that time we were
not shipping any grain to Russia. Everett was part of the Senate group
that went to Canada and they made an agreement where Canada could ship
grain to Russia. I heard him make a speech that we ought to ship grain
to Russia. He used that statement on the Senate floor, "As long
as we're talking we won't be shooting." I often think of it,
especially right now with all the meetings coming up with the Russians.
When you stop talking that's when somebody's liable
to start shooting.
Getting back to Phoenix. I went out and I bought 25 acres of ground and
started to build a plant and my father, having had that stroke, said
that he had never agreed to build a factory in Arizona. He said that if
we built that factory out there then the one we had here in Spring City
would be standing idle. Fortunately we had made a deal when I agreed to
go to Arizona with Penny and Sears. I told them both that my father was
objecting like hell to my building this new plant out there and they
became as excited as all hell about having a plant where they could have
overnight delivery instead of 3 to 4 weeks, plus the fact that the
freight rate was $11.50 a 100# from Philadelphia to L. A.
From Phoenix, it was 90¢ a hundred. Round figures, 30 dozen
underwear made a hundred pounds, so instead of the 35 or 40¢
a dozen freight; 3¢ a dozen freight. That was our
profit - more than our profit. So we had another
board of directors meeting and my father accused our attorney and our
accountant - he fired them right off the board of
directors just like that - he said that they took
out the record of the minutes and retyped the record of the meeting
where we had agreed to built the plant in Arizona. He told me he would
either buy me out or I would buy him out, and that he would give me a
year. I said, "How much do you want for it?" He said,
"I want what it's worth, you know what it's worth more than I
do. You tell me how much you're willing to pay me, I'll either take it
or we'll liquidate." My father owned 83% of the stock at that
time and I owned 17%, so there wasn't much question about whether it
would be liquidated or be sold. He was calling the pitches. I went
down to see Everett real fast. Everett and I
sat down and we talked and we decided between us what I ought to offer
my father. We arrived at a figure of $2,500,000; two and a
half million dollars.